It goes like this: After slogging through six months to a year of frenzied product development and user testing, seed-funded tech start-ups are fatally hitting a wall — the million to several million dollars in VC funding they need to scale up their cool new services is nowhere to be found. The result is the cruel and needless throttling of a vast stream of promising fledgling companies down to a mere trickle of survivors. Share of seed-funded companies that won’t be able to get follow-on funding: 61%.

Yea, though I walk through the valley of the shadow of start-up death…

In mid-2014, William Hsu of Mucker Capital wrote in re/code: “the distance between that “eureka” moment when an entrepreneur has an idea, to getting funded by a seed-stageinstitutional VC, has become the valley of death — littered with companies that just simply could not get off the ground with little fanfare, attention, or data.”

With 2014 being a massive year for tech M&A, some of the Series A crunch concerns have been alleviated by the availability of early stage “acqui-hire” exits; as Jacob Mullins notes in Business Insider, “Google, Facebook, and Twitter cut the path for the acqui-hire and eased the Series A crunch.”

So maybe there is no crunch, or if there is, it isn’t the horrific “valley of death” that some believe. But crunch or no, from my experience it is certainly difficult.

My company, Kinetic Social, raised its Series A in May, 2013 – a combination of equity and venture debt. We raised our Series B in early 2014, all equity and substantially larger ($18 million versus $8 million). And yet, while both were challenging, the Series A was definitely the harder raise.

Why? In our case, there were at least three significant challenges to surmount:

We were out raising money from entirely new investors, pitching our company to venture investors who had barely heard of us.

We were operating in a sector (paid social advertising) that was largely unproven at that time.

We operated in a crowded industry segment with literally dozens of companies (50+ in our space) that had some form of seed or early stage capital… and some that were further along than that. As AdExchanger’s Zach Rogers puts it: “To many, it seems the landscape of social ad buying platforms has been rapidly commoditized … But Kinetic is betting that it’s early innings for social marketing, and that the winners will bring special-sauce optimization to multiple APIs.”

We were indeed betting on the “early innings” concept Zach suggested. Moreover, we were convinced: 1) what we had already built at Kinetic would command an investment from a smart venture capital firm; and 2) Kinetic would stand out from the pack with a clearly differentiated product and solution. In effect, we were going to market to ask (new) investors to pick us as the likely winners in our crowded space.

Fortunately, it worked. But it wasn’t easy. We contacted about 60 firms, pitched to 30 or so, and ended up with three term sheets – all in roughly one year’s time. Our conviction got us through the process – we believed we were on to something substantial. The combination of a talented team and a strong market opportunity propelled us to realize our vision.

It also helped – a lot – that the market for our services began to shift in our direction. In particular, social media advertising began to evolve from being a primarily earned (free) media model to a primarily paid advertising model. And while we weren’t surprised, we spent a long time in 2012 and early 2013 hoping the pace of this change would accelerate. We began to see it in early 2013 – it’s no coincidence that we closed the Series A shortly thereafter.

Bottom line? The Series A is hard, but raising it simply means you must prove that you have something real. Once you do this, once you prove that there is a bona fide market opportunity for your idea, there is smart capital out there to back your enterprise.

Don Mathis is the CEO and Co-Founder of Kinetic Social, a social data and technology company focused on making sense of the world’s social signal. He also serves in the US Navy on reserve duty, where he is an Expeditionary Combat Logistics & Anti-Terrorism Officer.

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My last post described a crisis situation my command faced in Bahrain. It was 2002, and we had been warned that tens of thousands of angry demonstrators were heading our way, with the objective apparently of overrunning us.

The subject of the post was about how the Navy has taught me, among other things, to manage through a crisis. As I wrote last week, “it’s a skill that has come in handy in my civilian career. From swiftly changing market conditions to frivolous lawsuits, from irrational competitors to even less rational bloggers whose journalistic integrity would make Rita Skeeter blush … operating in an entrepreneurial environment sometimes feels like brief moments of sanity in an otherwise ultra-manic universe.”

But back to that day in 2002… in my last post I broke off just as, at the time, I was beginning to think we were in a true no-win scenario, that we might not actually get out of it unscathed. Or as we say in the service, we were on the verge of being in “a world of hurt.”

Watching how people reacted to all this was very interesting (I mean, in retrospect). Some folks fared badly. I remember one officer – not from my command (nor my branch of service I’ll add), and I won’t describe him further lest he someday read this – who was on the verge of real panic. He was planning to “commandeer” a vehicle and make a dash for it. He asked me if I wanted to come, as I caught him rifling through a cabinet for truck keys. And I’ll admit, it was tempting – staying where we were was beginning to feel like a death sentence. But I declined. Whatever the outcome, I understood that it was my duty to be there. It may have sucked, but I had volunteered for serving in the first place … abandoning that commitment wasn’t an option.

It was pretty much precisely at this moment that my Commanding Officer (CO) arrived on the scene. He didn’t need to come; he had left the safety of the main base to get there, and with the evacuation order in place and the Marines already deployed, he could very much have justified staying where he was. But he didn’t. Moreover, he would not have stayed away in a million years – we were “his people”, and he would have moved heaven and earth to be there and share the consequences with us.

This represents a phenomenon that I find is rarely understood by the “outside world” (i.e., those who haven’t served). When you have the privilege and responsibility to be a leader in the military, you learn quickly that it is all about your team, about your people. As a (different) Commanding Officer I once had used to say frequently, “take care of your people, and they will take care of you.” The bond you develop with your team, the sense of commitment to their safety and well being, goes far, far beyond what occurs in nearly any civilian counterpart scenario.

Back to my CO in Bahrain: not only did he come to join us at that moment, but he projected a vision of calm despite the overwhelming tension and impending violence. I’ll never forget the easy command he seemed to have of the situation … how he got the specwar commander to stand down his defensive perimeter and put away his heavy weapons, and yield the force protection mandate to the Fleet Anti-terrorism Security Team Marines with their non-lethal gear. How he got everyone aligned to complete the lock-down with order and discipline. How he ensured that we had at least a fighting chance to egress the area once our work was done and the violence had commenced.

It is a fair statement that without his leadership, people would have still been running about like headless chickens as the demonstrators crashed the gates. But this was a group that knew how to function as a team, and the CO had spent many months getting them to operate as such. He brought the team back to that level in a matter of moments. His transformation of the scene was almost breathtaking.

Long after, I asked him about that time. He admitted to me that he was as frightened as the rest of us. “But Junior,” he said to me, using the nickname that he had begun calling me on my first day reporting to him, “always, always keep your game face on.”

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So what lessons can be drawn from this experience, lessons that transcend service in a war zone? A few, I think:

First and foremost and always: the team matters, and it matters above all. The CO saved the day in Bahrain, but only because he had a good team in place already with mutual respect shared between leader and led. Note to the business leader: if you ever think that the story is more about you than your people, you are in real trouble

Second: keep your game face on. Not because you are trying to present a false sense of security in the face of adversity, but because situations are influenced by people as often as the other way around. Psychology is a part of every issue. Embody confidence because youfind the reasons to be confident, and give that confidence to your team. If the guy or gal in charge loses their cool, you can bet that the team will too.

Finally: act. Action solves problems, and “analysis-paralysis” rarely adds value beyond a certain point. Too many business leaders get shell-shocked when facing a crisis. Personally, when things seem challenging I find it helpful to remember that history is filled with people who have faced situations far harder than my own. Determine a solution and execute … even if it doesn’t work, at least you are engaged, and perhaps you’ve generated new options as a result. The CO that day immediately commenced giving direction to his command, and that eliminated much of the hand-wringing and doubt around the viability of our situation.

My Grandfather, who was a Captain in the Merchant Marine, used to say “God damn it, do something.” Be proactive, make a decision and – as we were only half-jokingly taught in Officer’s Candidate School – if that decision happens to be right, so much the better. A bias to action will overcome many obstacles in and of itself.

How one manages when times are good is no indicator of competence… it is when the challenges are extreme that we see who we really are. I got to see that in Bahrain. I’ve seen it at other times during my military service. And I’ve seen it in my civilian work (albeit with less dramatic consequences).

In a future post, I’ll talk about a time when I put that learning to a pretty serious test in my civilian job.

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Oh, by the way, as to the situation that day in Bahrain? It culminated in anti-climax (for the US military, at least) … but this message about crisis management wouldn’t have resonated as well if I told you that upfront, would it have?

In fact, what makes it possible to focus on general learnings from a tale like this, for me anyway, is precisely because it ended benignly. Most of us in the military have had experiences post-9/11 that were also, perhaps, great “lessons learned” events, but that are far too painful to openly discuss. Or to debase by translating them into a business lesson.

The demonstration that day occurred at the Pearl Roundabout, and the protestors did try to march to the military air terminal. But the demonstration was smaller than the intel folks had forecast, and the marchers never got to us. The Bahrain anti-terrorism police stopped the protesters on the way, in much the same way they have stopped protesters in the last few years of the Arab Spring: with bone-breaking tactics.

And while this is not a political post or blog, it merits noting: these strong-armed tactics may have worked to stop the protests in their tracks. But the sense of hopelessness that drove them in the first place remains as palpable as ever across the Middle East. It is hard to see how there is a happy ending under such circumstances.

Don Mathis is the CEO and Co-Founder of Kinetic Social, a company launched in 2011 with a core focus of marrying “Big Data” to social media on behalf of large brand advertisers. He also serves in the active reserve of the US Navy, where he is the Commanding Officer of a highly deployable, selectively staffed, joint-service combat logistics unit that supports forward deployed war-fighters.

I last posted about why my Naval service has meaning for me. How I get the opportunity to serve with folks from all walks of life, unified in a common endeavor: doing something for the sake of others, doing something that isn’t just about the predominant “me”-obsessed cultural zeitgeist.

It’s grounding, especially in my civilian world of ad-tech entrepreneurship, where the bullshit can be so thick you need a full MOPP suit to keep from choking on it.

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But the Navy’s also been one of my most important classrooms. I’ve learned more about management and leadership in the service than I did at B-school or McKinsey, and I draw deeply on these lessons at Kinetic Social.

One of my biggest learnings? How to manage through a crisis. It’s a skill that has come in handy in my civilian career. From swiftly changing market conditions to frivolous lawsuits, from irrational competitors to even less rational bloggers whose journalistic integrity would make Rita Skeeter blush … operating in an entrepreneurial environment sometimes feels like brief moments of sanity in an otherwise ultra-manic universe.

The trick is to “keep your head when all about you are losing theirs’”, to paraphrase Kipling, and drive your vision through the gauntlet of crises achieving success despite them. Or perhaps because of them: “Sometimes a crisis is a good thing for a company. Recovering from a knockout punch often requires heroic efforts from the team,” wrote Fred Wilson in his blog post How Well Do You Take A Punch? How you cope, how well you turn adversity into opportunity determines your eventual success.

This post is about a “trial-by-fire” dose of instruction in the art of crisis management while serving with the Navy.

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In 2002, I was deployed to Bahrain early in my first overseas “Long War” tour. This was a time when Afghanistan was still a pretty safe place to be in an unarmored Humvee, a time when no one really believed – I mean, none of us on active duty in the Middle East – that we’d actually invade Iraq. The war then was against Al Qaeda, and we were making progress. These were the salad days of the War on Terror.

On a particular early Spring day when the weather was amazing and the god-awful summer heat hadn’t yet started roasting the Persian Gulf, I was on duty at the military air terminal in Bahrain, a major logistics hub for Central Command. I had just enjoyed a stroll back to our side of the airfield from the little gedunk shack that served a terrific shawarma, when my Senior Chief came sprinting towards me across the aircraft ramp. “Sir! We’ve got a real Charlie Foxtrot!” he shouted. Charlie Foxtrot: mil-speak for Cluster F#ck.

Protesters in Bahrain

The early signs of unrest in Bahrain occurred long before the Arab Spring started in Tunisia or Tahrir Square. Bahrain’s Shiite majority – about 70% of the population – has long felt oppressed by Sunni minority rule. And when I say long, I mean centuries-long. Bahrain was conquered by the Sunni al-Khalifa family in 1783, and they have ruled the country ever since. And in 2002, King Hamad bin Isa Al Khalifa – who had earlier pledged to implement a genuine constitutional monarchy – was actively backing away from real reform and retrenching. The Shia felt betrayed and feared greater Sunni oppression, and sporadic protests broke out … a precursor to the troubles in Bahrain today.

Bahrain is home of the U.S. 5th Fleet, and that’s why I was there, in the midst of a crisis that began to unfold around me on that otherwise pleasant Spring day. Then, as later, Bahraini opposition demonstrations often began at a place called the Pearl Roundabout (it is now destroyed). There had already been a series of protests over the past few weeks, nominally in solidarity with Palestinians against Israel. But the subtext of Shia-versus-Sunni and an anti-American flavor was strong.

On April 5th, just a few days before, 20,000 protesters lobbed Molotov cocktails at the U.S. Embassy compound and breached its walls, with Bahraini anti-riot police stopping the demonstrators by using clubs, rubber-coated bullets and tear gas. A McDonalds that I’d been to was attacked as a symbol of America. Rumor had it that Shia doctors had set fire to their hospital in protest. A U.S. sailor was badly injured by an improvised explosive device attached to his car. It was a tense time.

The Pearl Roundabout was less than three miles from where I was at the military air terminal. On this particular day, the protest that formed there had the earmarks of a major civil disruption, a pre-planned event that could signal the beginning of serious sectarian violence – or so our intel people thought. They warned of 50,000 to 75,000 people, agitators embedded in the crowd with weapons, organization provided by Iranian-linked terrorists. It wasn’t clear that the Bahraini authorities could control or stop it.

And this crowd was supposedly marching our way to overrun and destroy the military airfield. All the makings of a lovely day.

US Marine FAST Company

The protocol for such events was simple, at least in theory: bring in the Marine Fleet Antiterrorism Security Team; evacuate most personnel out of harm’s way, shred classified materials that cannot be removed; fly out all aircraft that could fly, tow any which couldn’t to the civilian-side of the massive airfield to buy time and allow the demonstration to dissipate. It should have been fairly straightforward.

But “the enemy gets a vote,” and in this case, one of our enemies was Murphy. As in, Murphy’s Law.

Just as we were thinking that we had a good handle on the situation, a C-5A Galaxy that was randomly and coincidentally transiting the theater at 35,000 feet declared an emergency and came screaming into Bahrain with a smoking engine. All of a sudden, we had a plane that couldn’t get out and that we lacked the equipment or time to tow away from the military air terminal.

A plane that was an awfully big, juicy symbol of America’s presence in the Middle East.

That would have been bad enough. But it got more interesting than that. On that C-5A was a contingent of special operations forces and their equipment. The Major in charge informed me that he wasn’t leaving the aircraft with its top-secret gear, and he’d defend it if necessary. When I told him that the senior officer present at 5th Fleet HQ had ordered him and his troops to leave the airfield and find safe haven, he refused and told me his orders “came from an authority higher than mine”. And then the Major began deploying his troops in a defensive perimeter around the aircraft.

Special Warfare Operators

SO… now we had an angry crowd of demonstrators gathering a few kilometers away, preparing to march on our position and supposedly lay waste to it. We had Marines with non-lethal gear ready to hold them off … but we also had specwar operators armed to the teeth – with quite lethal gear, as you would imagine – surrounding an airplane as big as a building ready to defend it at all costs (what the hell was on that plane anyway?).

This all developed incredibly rapidly, and there was a growing, palpable sense that things were getting out of hand. It wasn’t even clear who the proper command authorities were with the specwar guys added to the mix, and we now had a seemingly impossible mandate to secure the facilities in the face of an uncontrollable mob hell-bent on destruction.

It was starting to feel like I was in one of those military Operational Readiness Assessment exercises where they keep throwing increasingly difficult complications at you. Eventually, such exercises end up putting you in a preposterous situation, the Defense Department’s equivalent of the Star Trek Starfleet “Kobayashi Maru” no-win scenario … except that this was no exercise. We were most certainly on the verge of being “in the shit”.

Don Mathis is the CEO and Co-Founder of Kinetic Social, a company launched in 2011 with a core focus of marrying “Big Data” to social media on behalf of large brand advertisers. He also serves in the active reserve of the US Navy, where he is the Commanding Officer of a highly deployable, selectively staffed, joint-service combat logistics unit that supports forward deployed war-fighters.

Lessons From The Front…

...contemplating what I’ve learned from my military experience, and how it applies to management, policy, and cybersecurity.

For readers from the past: I’ve started a separate blog focused on social media and ad:tech (especially in “Silicon Alley”, NY), drawing from job with Kinetic Social. These posts used to be mixed in here, but can now be found at Silicon Alley Considered